Original Title: Bitcoin falls under $67K as stocks sell-off, but BTC derivatives are stable

Original Author: MARCEL PECHMAN

Compiled by: Lawrence, Mars Finance

Last night, Bitcoin's price fell to $67,000, erasing gains from the previous three days. Some analysts suggest that one reason for the pullback is that investors have reduced their exposure to Bitcoin due to concerns about traditional market impacts. However, indicators for Bitcoin derivatives remain very stable.

Despite concerns that many economies may lose momentum or that confidence in government debt refinancing capabilities is waning, demand for Bitcoin derivatives as a hedge tool remains stable. If whales or arbitrageurs expect further declines, these indicators will reflect greater volatility.

Bitcoin futures show no signs of bearish bets.

In a neutral market, Bitcoin futures premiums typically range from 5% to 10%, only slightly affected on October 21. The rise in monthly BTC futures prices reflects an extended settlement cycle, with premiums exceeding 10% indicating bullish sentiment.

Bitcoin 2-month futures annualized premium. Source: laevitas.ch

On October 21, Bitcoin re-tested the support level of $67,000. The annualized premium (benchmark rate) remains above 9%. However, it is important to confirm whether this sentiment is limited to the Bitcoin futures market before drawing conclusions. Based on price charts alone, Bitcoin's price movements seem to reflect the intraday performance of U.S. stocks.

S&P 500 Index Futures (green) and Bitcoin/USD (blue). Source: TradingView

Arif Husain, head of fixed income at UBP, told Bloomberg that U.S. 10-year Treasury yields "will test the 5% threshold in the next six months," driven by rising inflation expectations and concerns over government fiscal spending. When investors sell bonds, yields rise, indicating that traders are seeking higher returns.

Husain pointed out that the government will issue "a large volume of new debt" to the market, while the Federal Reserve is trying to shrink its balance sheet to curb inflation and prevent the economy from overheating. The annual cost of interest on U.S. debt has exceeded $1 trillion, prompting central banks to consider lowering interest rates.

Bitcoin prices have not decoupled from U.S. stocks.

Against a backdrop of uncertain macroeconomic conditions, fear, uncertainty, and doubt (FUD) have significantly influenced Bitcoin's price trends.

Although Bitcoin is generally seen as uncorrelated with traditional markets (having periods of complete decoupling from the S&P 500), the correlation over the past month has remained above 80%, indicating a close alignment in the trends of these two asset classes.

Bitcoin 40-day correlation with S&P 500 futures. Source: TradingView

Unlike the negative or negligible correlation between Bitcoin and the S&P 500 index from mid-July to mid-September, recent data suggest that both markets are driven by similar factors. The correlation between Bitcoin and gold has been strengthening, exceeding 80% on October 3, further confirming this hypothesis.

The Bitcoin options market also reinforces the argument for derivative resilience. The 25% delta deviation indicator shows that the trading price of put (sell) options is lower than that of equivalent call (buy) options.

Bitcoin 1-month options skew, put/call options. Source: Laevitas.ch

Typically, a deviation between -7% and +7% is considered neutral, and the current indicator is at the boundary between neutral and bullish markets.

In short, derivative traders have not shown panic over Bitcoin's recent price drop. If traders expect prices to drop further, the deviation will shift towards zero or higher. Overall, Bitcoin derivatives continue to exhibit resilience.